Imported inflation ensures long battle
By Wang Yanlin |
April 21, 2011, Thursday
|
Print Edition
Print Edition
CHINA may have to grapple with inflationary pressure brought by imported inflation for a longer period of time, senior officials and market observers said yesterday.
"The rising prices of commodities on the global market exert a huge influence on China," Zhu Hongren, spokesman for the Ministry of Industry and Information Technology, said at a press briefing in Beijing.
"It (imported inflation) created a huge challenge for China to deal with the already high inflation rate."
Zhu refuted the argument that China exported inflation by increasing wages. He said rising wages in China are normal as a country develops.
"It is either nonsense or a misunderstanding to say China's rising wages, a normal step in development, are exporting inflation," Zhu said.
But China should be prepared to handle growing inflationary risks, according to other analysts.
"Ample liquidity, rising imported price increases and robust domestic demand will work together to keep China's inflation at a high level this year," said Wang Jun, a researcher at the China Center for International Economic Exchanges, at a monthly forum held by the think tank to analyze economic conditions around the world.
Some analysts expect inflation will moderate in the second half, but "my projection is that it will remain high," Wang said.
China's Consumer Price Index, the main gauge of inflation, rose to a 32-month high of 5.4 percent from a year earlier in March. To curb inflation, the People's Bank of China on Sunday again ordered commercial banks to put aside more money as reserves.
Since the start of this year, China has hiked interest rates three times and reserve requirement ratio four times.
But so far the inflationary pressure continued to increase.
After major cities in China imposed restrictive policies to curb speculation in properties, funds were channeled into the commercial goods sector or second-tier cities, which fueled the already high inflation, Wang said.
"The rising prices of commodities on the global market exert a huge influence on China," Zhu Hongren, spokesman for the Ministry of Industry and Information Technology, said at a press briefing in Beijing.
"It (imported inflation) created a huge challenge for China to deal with the already high inflation rate."
Zhu refuted the argument that China exported inflation by increasing wages. He said rising wages in China are normal as a country develops.
"It is either nonsense or a misunderstanding to say China's rising wages, a normal step in development, are exporting inflation," Zhu said.
But China should be prepared to handle growing inflationary risks, according to other analysts.
"Ample liquidity, rising imported price increases and robust domestic demand will work together to keep China's inflation at a high level this year," said Wang Jun, a researcher at the China Center for International Economic Exchanges, at a monthly forum held by the think tank to analyze economic conditions around the world.
Some analysts expect inflation will moderate in the second half, but "my projection is that it will remain high," Wang said.
China's Consumer Price Index, the main gauge of inflation, rose to a 32-month high of 5.4 percent from a year earlier in March. To curb inflation, the People's Bank of China on Sunday again ordered commercial banks to put aside more money as reserves.
Since the start of this year, China has hiked interest rates three times and reserve requirement ratio four times.
But so far the inflationary pressure continued to increase.
After major cities in China imposed restrictive policies to curb speculation in properties, funds were channeled into the commercial goods sector or second-tier cities, which fueled the already high inflation, Wang said.
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